Today, China GengSheng Minerals, Inc. announced that it has signed a five-year strategic partnership agreement with a U.S.-based strategic advisory, marketing and technology company for the marketing and distribution of its fracture proppant products in the North American market. China GengShen is a leading high-tech industrial materials manufacturer that specializes in producing heat resistant, energy efficient materials for a variety of industrial applications.
According to the agreement, the parties will collaborate on the development of the fracture proppant market in North America through the establishment of a jointly-owned brand that will be marketed to North American oil & gas producers. GengSheng will ship 4,000 metric tons of proppant products per month, beginning in July 2011, with volume increasing on a bi-monthly basis. Volume shipments are expected to reach at least 8,000 metric tons per month by October 2011.
“From our initial discussions with the partner, we were impressed not only with their capabilities, but also their deep knowledge of and strong connections within the North American fracture proppant market and oil & gas markets, and we believe they will be an ideal partner as we work to expand our presence internationally,” said Mr. Shunqing Zhang, Chairman and CEO of China GengSheng Minerals. “In addition to the significant revenue potential this partnership presents, it will provide us with our own brand specific to the North American market. The establishment of this brand will allow us to build awareness of GengSheng among international oil & gas customers, rather than remaining behind the scenes, as we had under our previous OEM sales model.”
Mr. Zhang added, “In order to better address the sizeable international growth opportunities in the proppant market, we have expanded our annual manufacturing capacity to 90,000 metric tons, and have begun construction on our second production facility, which will provide another 60,000 metric tons of capacity per year, beginning in the third quarter. Given our advanced technology, increased capacity and diversified marketing channels, we are confident in our ability to quickly capture meaningful share in the overseas fracture proppants market as it continues to mature.”
Under the agreement, GengSheng’s partner has the option to purchase quantities in excess of those stipulated in the contract, based on available capacity.